Uni Reading List
Index / 001 EN
Financial Accounting cover

Business

Business

Financial Accounting

Patricia A. Libby et al.

Undergraduate-level introduction to financial accounting, covering core principles, real-world applications, and analytical tools for informed decision-making.

Difficulty Level
Intermediate
Academic Level
Undergraduate
financial accountingaccounting principlesfinancial reportingfinancial statementsaccounting fundamentals

01 / Reading Guide

Reading Guide

Citation

Libby, R., Libby, P. A., & Hodge, F. (2023). Financial Accounting. McGraw-Hill Education.

Chapter Summary

The book has 13 chapters. The publisher describes the author team of Robert Libby, Patricia Libby and Frank Hodge as continuing a best-selling tradition of engaging students from the first day, and lists four attributes: a "focus company" approach that integrates each chapter around a familiar company, a building-block approach that spreads transaction analysis over two chapters, a balance of transaction analysis and financial-statement analysis based on real companies, and technology such as videos, Integrated Excel and General Ledger problems. The chapter titles below follow the publisher's current table of contents; other editions may word some titles differently.

Chapter 1: Financial Statements and Business Decisions

The opening chapter introduces the financial statements and how they inform business decisions. It is the entry point to the publisher's focus-company approach.

Chapters 2–4: Investing and Financing Decisions and the Accounting System; Operating Decisions and the Accounting System; Adjustments, Financial Statements, and the Closing Process

These three chapters cover the accounting system. By their titles, the first two treat investing, financing and operating decisions as the source of transactions, consistent with the publisher's building-block description of transaction analysis over two chapters. The fourth chapter moves on to adjustments, the preparation of financial statements and the closing process.

Chapter 5: Communicating and Analyzing Accounting Information

The fifth chapter turns from recording to communicating and analysing accounting information. Its title places it between the accounting-system chapters and the item-by-item chapters that follow.

Chapters 6–11: Sales Revenue, Receivables, and Cash; Cost of Goods Sold and Inventory; Property, Plant, and Equipment; Intangibles; and Natural Resources; Liabilities; Bond Securities; Stockholders' Equity

Six chapters take the main balance sheet and income statement items in turn: sales revenue, receivables and cash; cost of goods sold and inventory; long-lived assets including property, plant and equipment, intangibles and natural resources; liabilities; bond securities; and stockholders' equity.

Chapters 12–13: Statement of Cash Flows; Analyzing Financial Statements

The book closes with the statement of cash flows and a chapter on analysing financial statements, drawing the earlier chapters together.

Key Concepts

Chapters 1–5

  • Financial statements and business decisions: the use of financial statements by decision makers.
  • Focus company: the familiar company around which the publisher says each chapter is integrated.
  • Transaction analysis and the accounting system: recording investing, financing and operating decisions, built up over two chapters.
  • Adjustments and closing: the steps between recording transactions and issuing financial statements.

Chapters 6–13

  • Revenue, receivables, inventory and long-lived assets: the chapters on individual items.
  • Liabilities, bonds and stockholders' equity: the financing side of the balance sheet.
  • Statement of cash flows: the third main statement, treated in Chapter 12.
  • Financial statement analysis: the closing chapter's subject.

Critical Analysis

Strengths

  • A consistent teaching device. The publisher says the focus-company approach integrates content around a familiar company, so students see statements as they appear for a real firm and not as isolated examples.
  • Gradual treatment of transactions. The building-block approach gives transaction analysis two chapters, which the publisher says gives students time to practise and gain mastery.
  • Statement analysis throughout. The publisher stresses a balance of transaction analysis and analysis of real companies' statements, which suits students who will use statements as managers and not prepare them.
  • Technology for different learners. The listed supports are videos, Integrated Excel and General Ledger problems.

Limitations

  • Introductory scope. With 13 chapters, the book ends at cash flows and statement analysis. Courses that go further into recognition and measurement for each class of asset and liability will need a more detailed text.
  • Digital features are separate purchase options. The publisher lists the eBook, print and Connect as separate options, so students should check which practice tools their course includes.
  • Edition variation. The publisher markets the title as an Evergreen product with successive releases, so chapter titles and numbering can differ between editions. Confirm the edition with your instructor before matching chapter numbers.

Where It Fits in the Course

In the financial accounting course, this is a mainstream introductory textbook. Weetman and Jubb's Financial Accounting: An Introduction takes a UK and international perspective, building on the accounting equation and the IASB Conceptual Framework and reporting under IFRS Standards. Atrill and McLaney's Financial Accounting for Decision Makers teaches from the standpoint of people who use statements. The openly licensed Principles of Accounting, Volume 1 follows transactions from journal entries through the accounting cycle and is free online, so it is a good second source for practice.

For what comes after, Kieso's Intermediate Accounting is the detailed treatment of financial reporting under US GAAP for the courses that follow the introduction. Scott and O'Brien's Financial Accounting Theory is a research-based account of why reporting takes the form it does and belongs after the basics are secure.

How to Use This Book

The book is meant for students with no prior accounting background who need to read and use financial statements. Chapters 1 to 5 are the core: statements, transaction analysis, adjustments and communication. Work through them in order, because later chapters assume the accounting system. Chapters 6 to 11 can follow the order of your course, since each takes a separate item. Chapters 12 and 13 pull the statements together and are good preparation for applied work.

Practise by following the focus company's statements as you read each chapter, and use the problem sets and any course platform to work transactions by hand. If you meet a term you cannot place, return to the relevant item chapter rather than reading on.